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Home Renovation Tax Credit (HRTC)

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Filing Your Return
Income Tax Act s. 118.04

Home Renovation Tax Credit (HRTC)

The Home Renovation Tax Credit (HRTC) is a tax credit that was only available for the 2009 tax year.  It was enacted as part of the 2009 Federal Budget.

Basics of the HRTC

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This is a temporary tax credit, and is a non-refundable tax credit.

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The tax credit is 15% of eligible expenditures on home renovations made in respect of eligible dwellings.

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The tax credit applies to expenditures over $1,000, up to $10,000.

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The maximum tax credit amount is $1,350 per family ($9,000 x 15%)

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Tax credit will apply for costs incurred after January 27, 2009 and before February 1, 2010.

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Costs related to an agreement entered into before January 28, 2009 are not eligible for the credit.

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Costs incurred will be claimed on the 2009 tax return, including the January 2010 costs.

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If an qualifying expenditure for the HRTC also qualifies for the medical expense tax credit (METC), both tax credits can be claimed for the same expenditure.

Eligible period

The eligible period is the period that began on January 28, 2009 and ended on January 31, 2010.

Qualifying relation

A qualifying relation in respect of an individual means

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the individual's spouse or common-law partner

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the individual's child or children who are 17 or younger at the end of 2009.  The child is not a qualifying relation if, at any time during the eligible period, he/she was married or in a common-law relationship, or has a child.

Family, for purposes of sharing the HRTC:

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A family consists of an individual, and where applicable, their qualifying relations.

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Each family is subject to the maximum tax credit of $1,350, based on eligible expenditures.

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The tax credit can be apportioned among the family members.  If the individuals cannot agree as to what portion of the tax credit each can deduct, the Minister of National Revenue may fix the portions.

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If two or more families share ownership of an eligible dwelling, each of those families will be eligible for their own credit up to $1,350, based on eligible expenditures.

Eligible dwellings

An eligible dwelling of an individual means a housing unit located in Canada where the individual owns, or owns with another person

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the housing unit; or

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a share of the capital stock of a co-operative housing corporation

A trust under which the individual is a beneficiary may also own the housing unit, or the share of the capital stock of a co-operative housing corporation.

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To qualify for the HRTC, the housing unit must be ordinarily inhabited at any time during the eligible period by
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the individual,

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the individual's spouse or common-law partner,

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the individual's former spouse or common-law partner, or

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a child of the individual

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The housing unit could include a cottage or vacation home.

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An eligible dwelling includes the land under the housing unit and up to 1/2 hectare of contiguous land (or greater area of land if the individual establishes that it is necessary for the use and enjoyment of the housing unit as a residence).

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For condos and co-op housing, costs will be eligible for the credit if they are incurred to renovate the individual's principal residence "unit", and a share of the cost in respect of common areas may also be claimed.

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Where a portion of a principal residence is rented out, the credit can be claimed only for expenditures made in respect of the personal-use areas of the home.

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Where costs are incurred for common-areas of a partly-rented home, such as a roof, the credit will apply only to the portion allocated as personal use.  See our article on property rental expenses.

Qualifying expenditures

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Means an outlay or expense that is made or incurred by an individual or a qualifying relation of the individual.

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Must be incurred during the eligible period, and supported by receipts, which will not have to be submitted with the tax return, but must be available if requested by Canada Revenue Agency (CRA).

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Expenditures will not qualify if they were incurred under the terms of an agreement entered into before January 28, 2009.

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Expenditures will qualify if the renovation or alteration of the eligible dwelling is of an enduring nature, and is integral to, or built into, the dwelling (qualifying renovation)

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Examples of qualifying expenditures would be
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re-shingling a roof

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interior or exterior painting

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kitchen, bathroom, or basement renovations

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replacing windows or doors

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new furnace or water heater

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resurfacing a driveway

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laying new sod

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upgrading wiring

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upgrading insulation

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Expenditures do not qualify if the goods or services are provided by a person with whom the taxpayer is not dealing at arm's length (e.g. close relative), unless that person is registered to collect GST/HST.

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Expenditures do not qualify if they are for repairs and maintenance which are usually performed on an annual or more frequent basis.

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Expenditures for appliances (e.g. fridge, stove) and audio-visual electronics do not qualify.

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Financing costs do not qualify.

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Other examples of non-qualifying expenditures:
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furniture and draperies

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purchase of tools or other construction equipment

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carpet cleaning

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house cleaning

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maintenance contracts for furnace cleaning, snow removal, lawn care, etc.

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an air conditioner which is a portable plug-in type (an air conditioning unit which is built in to the home heating or ventilation system would be eligible).

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goods that have been previously used, or acquired for use or lease, by the individual or a qualifying relation of the individual

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made or incurred for the purpose of gaining or producing income from a business or property

HRTC documentation

Make sure you have the documentation you need to support your HRTC claim.  The type and quantity of goods purchased or services provided must be clearly identified on any agreements, invoices and receipts.  Required information includes, but is not limited to:

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information that clearly indentifies the vendor/contractor, including the business address, and if applicable, the GST/HST registration number;

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the date the goods or services were purchased or provided;

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a description of the work performed including the address where the work was performed; and

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the amount paid.

The Canadian Tax Calculator includes the home renovation tax credit.

Other HRTC resources

On Department of Finance website:

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Home Renovation Tax Credit from Canada's Economic Action Plan

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Personal income tax measures - Tax Measures, supplementary information, from Budget 2009.  Scroll down to the HRTC information

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Explanatory notes to legislative proposals - Sep 14, 2009

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Notice of Ways and Means Motion - Sep 14, 2009

On Canada Revenue Agency (CRA) website:

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Home Renovation Tax Credit

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The Home Renovation Tax Credit, your customers and you! - for construction business owners, contractors and retailers.

 

Québec residents can also benefit from a new refundable provincial tax credit.  See:

Québec Refundable Home Renovation Tax Credit

 

Revised: February 12, 2012

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